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Worldwide Exchange

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

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U.s. 39, Us 33, Ubs 23, Spain 15, China 14, Toyota 11, Eu 8, Bob Dudley 8, Uk 8, Mexico 8, S&p 7, India 7, Ross 6, Algeria 5, Faa 5, Kelly 4, Carolin 4, Russia 4, Boeing 4, London 4,
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  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    February 5, 2013
    4:00 - 6:00am EST  

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hello. welcome to today's edition of "worldwide exchange." i'm ross westgate. >> and i'm kelly evans. >> ubs hit by legal charges and restructuring. >> bp fourth quarter net profit beats forecasts by almost $4
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million. we'll bring you an interview with the ceo first on cnbc in the next half hour. fueled by a weaker yen and strong sales of cameras in the u.s. and shares in virgin media rally after an offer for a takeover that could value the uk cable operator at $20 billion. >> all right. welcome to tuesday. >> it's get together tuesday. coordinated, as well. >> the final print for the eurozone is finally come in, 48.6, a little better than the forecast of 48.2. >> may i just say, though, the employment index, look at that,
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46.1, which is just barely better than the flash estimate but still the lowest since december 2009. on a downward trajectory. it's not germany where the final composite was 54.4. it's the periphery still. france's final january pmi falls to 46.1. >> france is where the concern is. we have francois hollande today speaking to the eu parliament. he's going to lay out his vision for the eu against that economic back drop. >> isn't it amazing? we come into the week yesterday with everyone still talking. you have that great barons cover, you come in, just get the risk trade massively off. and the question for today and the rest of the week is frankly whether that's a bump in the road or the start of a down trend. >> you have the front cover, these are all good contra
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indicators. >> sorry, media friends. but this is not exactly the best of -- >> we always have timing. on today's show, we're in zurich where we hear from the ceo of ubs about the group's outlook. the swiss bank won to a loss in the fourth quarter. >> and is we'll head out to california for a look at the next offer. it's due to be released later today. we'll be live in madrid as the spanish prime minister's party pledges to fight corruption allegations that have prompted calls for his resition naz. >> and for its to earn its annual forecast on a weaker yen, we have in-depth analysis at 10:40 cet. before that, we'll hear tr bob dudley. so all that and plenty more on today's program. looking good. first on of all, ubs has posted a quarterly and full year net loss hit by a 1.5 billion $charges.
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the swiss banking giant did manage to beat forecasts for the forty quarter. the group cited progress with the overhaul of its investment bank which will eventually shed 10,000 jobs. carolyn is in zurich for us covering the story. she's been speaking to the ubs ceo and joins us now. hi, carolin. >> good morning to you, ross. ubs shares has been on quite a sole tile ride this morning. firsts they were down at the open and now they're higher by 1%. numbers, as you said, they were better than expected. now, we knew that ubs was going to post fourth quarter and full year net loss. as you said, this is largely because of this $1.5 billion libor related fine. on top of that, you've got restructuring losses, losses on its own debt. we knew that ubs was going to post this lost, but it was smaller than expected at 1.9 billion swiss francs. apart from that, numbers looking pretty good, actually. capital very strong. if you look above the 3 capital,
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that came in at 9.8%, among the best in class. ubs raised the dividend to 15 cents a share. that's an increase of 50%. and as you pointed out, the risk rate reduction is even ahead of schedule. that is what is pleasing analysts this morning. but on the other side of the coin, they've got net new inflows which were disappointing and management revenues and margins were weak, as well. but you mentioned, i did manage to catch up with the ceo of the business and here is how he felt about the results in the fourth quarter. >> well, very pleased with the results. they are within our expected target, but most importantly, we achieve all our targets for 2012. we have dramatically increased our capital position. we have reduced costs tactically and structurally. we have in a way and we have our operations under control. we are very pleased with the
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performance. >> markets have been in your favor. how is the strategy and the implement of that going to go to work if markets are not in your favor? >> actually, i would argue if markets are not in our favor is a reason more to go through a strategy change and reshape our business. within our business, the right business makes it in order to serve our corporate noous institution on and wealth management declines. >> we saw that margins are still under pressure, they came in below expectations, net new inflows. does that worry you? >> well, margins are under pressure for any reason. >> you look at what happened in the next 15 months. clients, risk appetite is extremely low. that's been going on for some time now. most importantly, at this low
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interest rate margins -- sorry. interest rate margins are very low and, therefore, we would need to see a chaeng, a structural change in the macroeconomic environment to seek lines getting more comfortable about taking more risk and being more active. >> is the biggest risk to activity and confidence going forward in 2013? >> i would say both geopolitical events, i would say, or basically that europe or the u.s. was from the discussions or basically going back to where they were last year. and that would be clearly undermine their confidence. >> your capital levels are very strong. you announced a 50% increase in your dividend payout. now an a lists are expecting even more over the next couple years. they're looking at a dividend yield of anything between a 7% and 9%. is that feasible? >> well, with him ever progress
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policy, but most importantly, we will have a payout ratio of at least 50% when we achieve our certain percent basel ratio. >> timely, you announced that libor fine in the fourth quarter. was that it in terms of kitchen sinking all the legacy issues? was that it in terms of litigation risks? >> look, i think we made very good progress on addressing many of those issues during 2012. you're always going to have problems, but i think many of those problems will be more and more industrywide problems and, of course, we're going to tackle them because that's the reason why we want to be strong with their capital position. we want to address those issues
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in a position of strength. >> one analyst who he says is hugely unimpressed by ubs's re structuring efforts so far is going to be on the show an hour from now. he says ubs is granted multiples that are simply not justified. while find out why in an hour's time. >> wow, carolin, thank you so much for that. now, sticking with financials, let's get a view here from allen capper, joining us on the set. allen, welcome. >> thank you. >> it's interesting to look at how investors are changing with -- credit investors in particular with regard to the tracking of investment and financials. so a couple of things going on, but i wonder if they do this, if they buy back debt in the first quarter, do you generally like that kind of move as an investor? >> i think generally investors like to see more supply. the real question, which i think applies across the whole
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industry is how are they restructuring their debt profile? obviously, the banks issue a certain amount of subordinated senior debt and covers. the investors have a certain demand. to what extent to those match? >> that's the key we're trying to balance now? >> where do you see it going across the sector? >> judging from s&s coming out over the next few days, it looks a lot more attractive relative to senior because the recovery rates could seem very, very similar. >> aren't people saying look at the s&s nationalization as a sign they're willing to bail in these debt holders? hasn't that actually sent a chill up investors' spine? >> i think the question we're really asking is what is the relative value between senior and sub? if you know the senior, there's a good chance of being bailed in. why not taking the highest spread and buy the subs? we'll have to evaluate where the
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balance between those lie. the key is it may be different in each jurisdiction. >> and how have you been positioning for the. >> where do you see that heading sthp. >> the financials trade through the nonfinancials. now, that's at an index level. the individual bond level, that isn't the case. the index is constructed differently. i think financials have run probably as far as they can now. so i'd be struggling to recommend them. overweight financials, but just a little less so. >> okay. we'll ask you about some of those other areas that you may like. allen will stay with us for a little while. >> meanwhile, the spanish benchmark is trading higher this morning despite the six-week highs yesterday. stephane is still in madrid and joins us for more. stephane, biggest jump we've seen this year in spanish yields.
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how has it been for you there? >> there was, of course, a very strong reaction. mariano rajoy resigned the accusations yesterday within the political party, his political party. he denied that senior leaders from the party received illegal payments between '97 and 2008 and he received the support from angela merkel say that the spanish government, she had confidence in the spanish government to tackle economic crisis by implementing more economic reforms. that being said, she didn't say more especially on the corruption case as was reported a few days ago. there is a reaction, there was a strong reaction in the bond market. today is a bit more quiet. but for sure, mariano rajoy lost the opposition not only in spain, but also at the european level. it's going to be more difficult
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for him to perhaps negotiate more time to reduce the spanish deficit and perhaps more difficult for him to ask for insensitive measures to stimulate the economy at the european level. there's a trend on twitter tweeting for the -- the contractions for rajoy reject and that's on the right very well the situation here in spain. since the case, the corruption case was reported by the newspaper a few days ago. rajoy lost six points in the opinion polls in approval ratings. he is now amid 24%. that being said, the leader, the socialist leader of the opposition remains in terms of rating. so even if there's a lot of pressure on rajoy, there's now not any alternative in shape. that's the reason why the worry
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in the market. that's the reason for the decline today on the ibex 35. >> stephane, thanks for that. the bond, is it driven by political uncertainty, of course, but the pmi is up this morning for spain, up 47. but the employment pmi, down to 42 and that's back from the low since this time last year. >> i don't like the numbers. if you'd asked me six months ago, i would have probably said possibility of spanish growth falling off the cliff, low. 10%, maybe. now if you ask me, i'd say low but probably 30% and rising. the markets need to factor in the fact that the nontail risk is clearly going higher. >> is that what's happening here, the market is repricing growth prospects for spain, not necessarily reacting to the latest political turmoil or does it have something to do with its prospects? >> i suspect the growth story should have been flagged a couple of months ago. these numbers reflect that. the political story, i think, is a catalyst to reflect upon the growth story.
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i'm not sure we can unbundle this. >> and what about spain versus italy? >> that's a really hard one. spain is primarily an economic story and now beginning to emerge with the political story, it is primarily a political story. it's quite a robust economy, at least compared to spain. so i think ultimately one will drag the other down if there's bad news, but in terms of the underlying correlation, it's quite low. >> they're tied together, head down a steep slow. interesting point. they were looking there at the spanish bond yields. the ten year is perking up, ross. 5.44% is the latest. >> kelly, let's bring everyone up to speed after sharp falls yesterday. europe has a majority of green at the moment. 7 to 3, advancers outpacing decliners. this morning as we track through, up 30 points. the xetra dax down 2.4%
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yesterday. currently up 14 points. the ibex was down nearly 3.75%. right now the cac 40 up nearly 2%. up today 0.5%. we'll run through these quickly for you. but we have arm holdings came out with better than expected numbers. go straight from that to the debt wall. shall we have a look at debt yields? probably worth taking a very quick look at. ten-year, a 14 basis point rise in spain. 5.44 yesterday. that's pretty much where we finished the session yesterday. remember, we have an auction across three issues coming up on thursday. that will be an interesting test, kelly. >> absolutely. and we want to keep an eye on what's happening on the earnings side of things. bp has reported better-than-expected earnings for its fourth quarter.
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replace many costs profit in the period was 2.1 billion. the company says reshaping work will continue to impact 2013 results. as a trial over its role in the gulf of mexico oil spill is scheduled for later this month. let's take a look at how bp shares are trading independent session in europe. about over just 2%. not too badly holding up there for the last seven-day period. julia chatterly has been speaking to bp's ceo bob dudley in his first interview since the end of the hostage crisis at a bp run plant in algeria two weeks ago. >> well, this has been a difficult time. it's almost a time of mourning. we're a big company, but we're very tight-knit. we've lost friends and colleagues, we're spending a lot of times with families and supporting them right now. not only bp, but our friends at stat oil lost a lot of people and contractors that were killed. for us, the compassion and the professionalism that our team and the other teams responded
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and working with government was extraordinary. so it's a tough time for everybody right now. >> does it change your perception of the cost and the risks involved in operating in a region like north africa? >> this has been operating in africa for -- it really came on stream in 2006 and construction before that really without incident. it was a highly secure site. this is a very, very unusual incident. but, of course, we are on heightened alert all over the world as you would expect at our facilities and rereviewing risks and we'll all learn from it. >> is it going to materially impact your cross space, though? >> we have security around our sites around the world. but clearly the whole industry is getting together and talking about what this might mean, including working with government. >> there were two warnings ooh a risk assessor last year about the risks in algeria and specifically to this gas field.
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were you aware of those warnings? >> well, there's a broad set of warnings, really, about every country that we operate in. there was no specific warning or warning in advance of this attack. i mean, these murderers came in and killed people just on a normal work day. so the algerian authorities and us didn't have warpings, but we certainly have had tight skurlt around many of our facilities and wherever we operate, really. so no, i don't know about those particular warnings. and, of course, afterwards with what's happened in mali, everybody is on high alert. >> you've got new projects starting in angola, in egypt, they're all considered relatively high risk. are you going to do anything differently going forward in light of what's happened in the last few weeks? >> well, it wouldn't be right for me to say exactly what we may be doing. oil and gas is found in many places around the world and some places it's difficult to explore
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and produce. and that is part 069 nature of the risks of our business. it's what we have to do and i can't think of a better group of people to do it than the people at bp. >> you're also in the process of ending the tk bp and moving into that relationship. how are you going to monetize the russia angle going forward? >> tnk has been a successful venture for ten years and it's a joint venture that has run its course. russia is so important for the oil and gas industry. we've worked there for many years and made big differences in terms of russian oil and gas production. .i think we've taken what had been a bit of a problem and turned it into an opportunity and i'm very much looking forward to working with ross net. >> how are you going to monitor the opportunity in that respect? >> it has great potential. it's the largest oil producing country in the world. we'll own just under 20% of the shares. we'll have roles on the board, but i see a long cooperation
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potentially between bp and ross net and opportunities inside and outside of russia. plus i think we can help with many of its assets. i'm excited about it. >> now back to the earnings. around the increase in the dividend this year, is that the message then to shareholders, growing confidence? >> yes. bp has been through a bit of a long wave length transition here from 2010. we sure that our shareholders know that we're going to have a progressive dividend policy. we want to increase down the road our free cash flow and is distributions to our shareholders, got them squarely in our sites. 2012 has been a year of milestones. we have sold $38 billion worth of assets, which is a very big number. therefore, some of on our of thes have gone, effectively with the divestments. we've got some milestones, many, many settlements from the u.s. >> you've stream leaned the business. you mentioned the divestments.
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when are we going to see the momentum from that renewed business showing in the results? >> 2014 is when things start moving because in 2013 we have about 50,000 barrels of oil a day yet to come. we're still shrinking down a bit from the tales of divestments. >> you said back in 2011 that that year was the turning point ask it's not really played out that way. is 2013 the year where you draw a line perhaps in the litigation that you just mentioned? >> well, for us, 2011 definitely felt like a turning point. we had no rigs operating in the gulf of mexico until late in c[5yp: third quarter and today we have seven operating and a couple others that were operational. so it was a turning point. as the divestments, this is a massive set of divestments. we've sold 50% of our platforms, a third of the wells and only 10% of the reserves.
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so we have a nice, strong platform to grow off of. >> that was bp's ceo bob dudley speaking to julie just a few minutes ago. we'll brick you more of that through yot the the show when he talks about the litigation risk as well as the underlying macro picture. great, everybody made it. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.
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over the weekend, china's service sector gauged up slightly for january, as well, which is adding to evidence of some economic rebound. let's check in with markets across asia. li sixuan joins us from singapore. >> thank you, kelly. as you just mentioned, those eurozone fears and a negative handover from wall street were somewhat offset by upbeat data from china. the latest pmi data confirmed more signs of china's recovery. the shanghai composite reversed early losses to end marginally higher today. developers left the game. railway stocks soared to 8% to 10% growth in light of people
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traveling during this week's holiday rush. meanwhile, the hang seng had its worst day in almost three months. shares tumbled 6.4% today after a $3 billion new share placement added 9.5% discount from montd's closing price. in japan, the nikkei pulled back from its 33-month high, ending down by nearly 2%. shares slipped of 6% after its outlook by 16%. retailing lost over 3%. this comes after its unit close in domestic same store sales last month. elsewhere, weakness in technology shares sent south korea's kospi lower by 0.8%. meanwhile, australian shares eased 0.5%. india's sensex now in action trading down by about 0. 5%.
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back to you. >> great.uk sixuan, thanks very much. lots of red behind her. >> we've got if the services pmi coming out of the uk. i suggest we wait 30 seconds, take the data and have a look and chat about it. >> what if i disagree? >> well, you know, you could, but you like -- >> i do like the data. i love to it to get it when it crosses. we have allen capper right here for some reaction. we know the uk data follows the overnight session in which we learned the service sector perked up a bit, but employment was extremely weak. and the question for britain, which has seen somewhat of the opposite pattern lately is whether that is sustainable. it looks like we're getting the figures out now. >> now. >> good lord. >> january pmi, 51.5, the highest since september. >> expectations pmi, 67.2 in january. it was 64 in december. the pmi pointing to marginal economic growth in january
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according to market. member service sector is very dominant in the uk. quite strong brc retail survey overnight, as well. so sterling and trying to bounce back, sterling has become the real risk off, risk on. i think it's superseded the dollar with the risk off currently with the yen to some degree. the dollar has moved into the middle ground. sterling/dollar, 1.5787.. allen, your reaction to that? >> i am struggling to understand these pmis. when you look at the actual data, it doesn't look too healthy. this is true across europe, as well, actually look relatively strong. so i think we have this consistent pattern which we're now trying to reconcile. i think the reconciliation is going to come at the end of the first quarter where we can see what the numbers look like in terms of q11 growth. for the time being, i'll keep my view neutral on the uk in part because the focus is on europe.
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i think the uk could be a difficult story, but that's -- >> how do you trade gilt here? i look sometimes at the range between the treasuries, gilt and bund. even though we're used to this pattern, i still struggle to understand the levels here. >> i think the levels are being driven primarily in the uk by the changes in the leadership of the bank of england. we're waiting for thursday's testimony to be out of the way to get a clear idea what is his view on qe? ultimately, that's why gilt yields have been so low. if it's clear the bank of england has to back off qe, not because the economy is stronger, but because of another policy, then i think that weakened beyond market fundamentals. >> strange quirk. it's the same day the bank of england and the current team are making a rate decision. it seems strange. >> when did he start, july? >> this is not till uly. i think it's an accident. i'm not sure there's anything -- >> yes, i'm sure it's an
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accident, but it is a little odd. there he is, the new incoming governor telling everyone what he thinks while the current team is making a rate decision. >> that is certainly going to be one to watch for for those gauging the reaction in gilt. now, on another note, u.s. prosecutors intend to bring civil charges against standard & poors for its ratings on mortgage bonds prior to the 2008 financial crisis. yes, this is the first enforcement action brought against a major credit rating agency over alleged illegal behavior tied to the crisis. so we want to know do you now trust rating agencies? that is the question. >> get in touch with us by e-mail at worldwide@cnbc.com, by twister, @cnbcwex or directly to us.
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and these are the headlines from around the world. ubs sees fourth quarter earnings hit by legal fines and restructuring charges. suffering client money outflows but the loss less than analyst expected the. bp's profits beat fourth quarter forecast. ceo bob dudley tells cnbc
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shareholder value comes first. >> we want to make sure that our shareholders know that we're going to have a progressive dividend policy. we want to increase it down the road our free cash flow and distribution toes our shareholders, keep them squarely in our sights. >> toyota revs up its full year outlook by 10% fueled by strong sales of camrys in the u.s. >> and shares of virgin media rally on a deal that could value uk operators at $20 million. we just brought you the latest out of britain's pmi results, but overnight, china's hsbc services pmi index rose to a four-month high of 5 4 in january, compared with a reading of 51.7 in december. meantime in understand kra, the service sector is critical there, as well. hsbc saw a bigger jump.
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in the battle between china and india here, who seems to have more momentum in its service sector economy? >> well, actually, india's manufacturing pmi for the month of january was the lowest among all the brics. that didn't work out too well. but there was a pull and push in terms of the services of the manufacturing pmi. services was at the best level we've seen in seven months with regard to do pmi data indicating that maybe there's some amount of difference with regards to service and the pmi data. the composite data came in at 51.6 in january, which is flat, but that has pulled up because of the data. analysts assuming that maybe the data would be sluggish going forward simply because, one, the january data for the pmi has not come out too strong and the core
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sector, basically 0% of the iip came back and grew at a marginal rate of around 2.6% indicating that maybe december was sluggish. since the january pmi was sluggish, as well, the trend for industrial production would be as a whole or manufacturing as a whole would be sluggish. let's see, there will be preliminary estimates from the gdp released by the o on thursday, as well. let's see what they threw up. maybe there would be some amount of light in the tunnel in terms of gdp estimates for india. but with that, it's back to you. >> perfect. ecta, thank you very much for that recap. bp pretax profit, $3.46 billion. replate placement costs in the period, 3.1. 2 company says reshaping work with continue with the trial
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over the gulf of mexico is set to begin next month. peter, we spoke to you before the numbers came out. they've done quite well from refining. what stands out to you? >> actually, it's a tax. the headline number was a decent beat, 20% up on consensus. but the underlying business, the upstream was about in line. the refining and marketing with about 3% better than we had expected. but it just so happened, at the end of the year, taxes seemed to go bp's way. instead of a tax rate of around 336% to 38%, they were paying about 16% and that actually is nearly all the difference. so that is not something which unfortunately we would expect something to happen on a quarterly basis. so take the money now. it's good news, but not something that you build into 2013. >> so why is the stock up to 32%? clearly that's not an operational thing.
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>> you're getting a little bit of melt yumm coming back in the gulf of mexico. overall volumes were down 7% year on year. if you take out the divestment, take out psas, they were down less than 1%. if you look at the u.s. liquids production, which is a real guide because it's seasonal, that was up around 45,000 barrels a day. so you've had two big fields which started at the end of the third quarter, which had been up and running for the fourth quarter. we're starting to see those come through in the fourth quarter. that's a tick in the box of what they said they were going to be doing. >> yeah. seymour pierce has been making the source this morning that, you know, they're in a morrow bust financial position. they've had divestments of may 37 since 2010 and we're getting a little bit more clarity on resolution on the legal side. is that how you see it or not? >> well, i haven't read 245
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piece of research. yes, we are. they've given some guidance in terms of cash flows. but the recovery in the kondo, and we have to expect either settlement before the 25th of february or that moving through to a trial. we expect settlement. once you've got settlement and you're on to the underlying business, yes, there's momentum, but actually, you know, we're seeing growth rates of around -- between 2.5 this year going to 3.2 over a period of 2015. that's not wholly different from what you're getting from a lot of other companies in the sector and, of course, it's from a lower base. y, they're in stroonger position. they are gearing is within the target range. but there's a lot of those cash flows still to go out and we still think bp is like a lot of others in the sector. still nearly on portfolio divestments, the asset turnover
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in order to show comfortable free cash flow positive. >> year-end target for the stock fee and where will you rank it? >> well, we have bp as a sector perform. we have it with a target price 12 months out of 530 pence. that's good upside. it's about 167%, 17% up side including the dividend that you'll get this year. but i think that's not wholly different from shell, which is a sector perform. i think the one investors should be looking for which is more volatile is bg where when people start to get grips of the numbers, we can see not much growth coming this year, but a lot of growth coming in 2014 and even more in 2015. so i think that's one of the ones capturing a lot more interest when we're speaking to investors. >> thanks for that, peter. perhaps's prt francois hollande
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is giving a speech on the future of the eu. we're going to keep you updated with his comments. it will be interesting to note, particularly regarding the economy at the moment what he says about the potential for full fiscal union or any kind of union on burden sharing and those kind of issues that you mentions that sort of stuff, kelly. >> yeah. you have to wonder how strongly he's going to respond to david cameron's vision of the eu. sovereign bonds, we've seen some interesting moves here in the last couple of trading sessions. spain and italy, we saw one of the biggest jumps, spain now 5.43%. italy is coming in a little bit today. not the case for spain. meanwhile, bundes and yields are moving slightly higher to 2.13%. we were discussing that with all allen. allen, this backdrop, i wanted to raise the question question of whether this has been a warning sign for corporate equities.
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>> it would suggest that, but i'm not sure it is. ultimately, credit is the asset class. i think investors have to have a lot more foresight and they have to start turning positions around that much earlier. >> has credit not been a warning sign or leading sign for us into .throughout the financial crisis and coming out of it? >> i suppose i'd love to say it is. but i think the truth in part is when you're managing the credit portfolio, you have to think three months ahead. which means if you see trouble coming, you have to start selling well, well in advance. also concerning spain in february and that's why you're seeing this unwind in credit, even from the second and third week in january. so he think maybe it is indeed the leading indicators, but possibly it's because the liquidity is lower.
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>> when you look at conditions today, do you see signs in credit of more caution? >> when i was recently traveling, the sense i got for investors is that their view is uniformly bearish right now and i think that's going to continue for a while if only because we are concerned about the nis in the u.s. we are concerned about spain. the one caveat i would have is this is economic data and is we can live with economic data. so yes, i think we go wider. my target on the 125 is something like that. i don't think we'll see a catastrophic widening and then we'll start to come in. ultimately, the demand/supply balance is bearish. >> allen, thank you so much for coming by this morning. virgin media has confirmed it's been approached by cable group liberty global for a potential takeover. a successful merger could deliver significant savings for liberty. it could heat up competition with bskyb which is the uk's
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leading tv operator and owned by, yes, rupert murdoch, a former colleague and long running rival of mr. malone. do you have virgin? >> i have tried all service providers in the uk. >> okay. so i guess the real question becomes how valuable is this asset? are there any other bidders? and a 20 billion size dealer potentially. >> you're looking at three players. i mean, you know, you have the media side and the cable, so sky, obviously, with tv and satellite. virgin with tv and cable and bp with cable but they're now offering quite a lot more. they've launched their own. those are the three, sky, the virgin and bp. >> virgin, as i understand, was first quadruple play 3450ed ya company play in the uk. which is interesting. >> they all play. they all now
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to grow, we have to boost our social media visibility. more "likes." more tweets. so, beginning today, my son brock and his whole team will be our new senior social media strategists. any questions? since we make radiator valves wouldn't it be better if we just let fedex help us to expand to new markets? hmm gotta admit that's better than a few "likes." i don't have the door code. who's that? he won a contest online to be ceo for the day. how am i supposed to run a business here
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welcome back to the program. boeing has asked the faa to conduct test flies of the 787 dreamliner jet. the moves suggest the company may be closer to resolving issues with the lithium battery that prompted a grounding of the jet two week ago. the faa may give the green light soon. but it could be weeks if no, sir not months away. shares responding by shaking it off adding about 1.4% in frankfurt trade this morning. japanese transport investigators still aren't sure what caused batteries to overheat.
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six out of the eight batteries were badly charred, but it's unclear whether electrical issues or the battery easy themselves were the problem. meanwhile, batterymaker gsu access said after the bell that its full year profit will fall by a third. but it's said the 787 problems aren't expected to be part of that. having reclaimed their top carmaker title from chrysler, toyota has accelerated profits. one of the most car companies in the world reports earnings. what do they tell us? >> hi, kelly. toyota reported its earnings today and had to revise its annual net profit forecast by more than 10% to $9.3 billion. that's almost tripling the last fiscal year's net profit. strong sales in the domestic market as well as in the u.s. profits. plus, the u.n.'s drop since last
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november helped. the company raised its estimates for revenue by around 2%. the world's vehiclemaker is hoping to sell nearly 9 million cars this year, more than the record amount sold last year. in the three months end of december, toyota posted a net profit of $1 billion, up 23.5 from the same quarter last year. also on the rise was revenue which jumped just over 9% to $50 billion. in the meantime, mitsubishi motors reported its earnings today, but didn't change its full fiscal year net profit forecast. the yen's drop helped, but costs related to a mini car recall are expected to squeeze on its profits. back to you, kelly. >> thanks very much for that. now, the president of is here to join us.
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michael, thanks very much, indeed, for joining us. look, we're seeing such a stark sort of difference between automakers doing well in asia. how are things going to pan out as opposed to trying to get into that chinese market? >> well, the outlook on asia is terrifically bullish. china looks to grow more strongly this year. southeast asia growing very rapidly. as you mentioned, toyota is now number one. despite the fact that last year it was down on the year, it's doing very well in southeast asia. so of all the places in the world to be, the united states is hot and so is asia in particular, southeast asia. >> has toyota suffered at all
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with the chinese sales because of the dispute over the islands? >> that's right. toyota sales last year were down year on year. that's changing now. the -- eats cooled quite a bit. in january, all japanesemakers including toyota enjoyed more than double digit growth year on year. there are indications that the chinese lk back on track in china, provided that the flash point from santaku island does not cause more tension later in the year. >> the yen is starting to weaken. how much will that help them in their fight against hyundai of south korea? >> it really has. hyundai was putting the -- on toyota and other automakers, now the tables have turned. the yen is strengthening.
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i'm sorry, the yen is weakening at the time the won is strengthening. that will put hyundai back and give further confidence to toyota and other japanese automakers to take market share here in asia and elsewhere. >> look, indonesia, how big a market is that going to be? >> it's just back to millions unit markets last year for the first time and by -- to 3 million. putting in the ranks of the top ten markets worldwide. the chairman was here just a month ago in indonesia and said indonesia is a key market for the future. watch this space. >> michael, good to talk to you. michael dunne and dunne and company. a bit of interference on the line, so our apologies for that.
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>> let's give you a look at what's on the agenda for tomorrow. we'll get corporate earnings from names like mazda, au electronics and auoptronics. also, the aero india show gets under way. >> meanwhile, francois hollande is giving into the parliament in the eu. he's been talking about the eu should have a -- sort of an exchange rate policy. >> there are peculiar comments suggesting that the value doesn't correspond to the u.s. economy. they almost need a more specific policy aimed at foreign exchange. >> what do you mean? >> who actually has a -- normally it's run by government. >> well, you could say that.
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that is who has foreign exchange policies. maybe the snb. they would have more big exchange rate policy when it comes -- it's basically depends on the country. but it would to me suggest that he would like to see that. >> i don't think he would argue for a stronger euro, certainly. >> but it's not necessarily the overall value. it's what does the french economy tend to be -- >> exactly. he's implying a stronger euro. there's a lot of talking out of both sides of the mouth here. we'll see what else he has to say. there's going to be many more visionary comments about the future. >> politicians speaks out both sides at the same time.
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>> this is the parliamentary commission on the banking standards. we'll keep our eye owes that, as well. >> yeah. haven't seen too much out of that hearing yet, but you are looking at a live feed there. >> stim around. we're going to take a quick break. swiss banking giant ubs did face a full impact with many issues going on. what does the fooe future look like for 2013? we'll explore when we come back.
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welcome back to "worldwide exchange." i'm kelly evans. >> and i'm ross westgate. here are your headlines today from around the world. >> ubs sees fourth quarter earnings hit. but the loss is less than analysts expected. >> shares in bp rises. preparing for a crucial trial on
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the gulf of mexico. still the ceo of cnbc hopes to turn the page on its legal troubles. >> we've moved a lot of this behind us and i think we've met our commitments and we're going to keep meeting our commitments. but we'll see how long this takes. >> toyota bumps up its full year profit outlook by more than 10%, fueled by a waeshg yen and strong sales of camrys in the u.s. >> and rights agencies under fire. the u.s. files a civil suit over rosy ratings the company gave for mortgage bonds in the lead up to the financial crisis. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> it was not a pretty day in markets yesterday. we saw equities down. the dow jones industrial average lost something in the range of
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1.5%. today we're looking for a bit of a rebound on that. the dow trying to add about 56 points. the s&p pointed up by several points. take a look at what's been happening in the overnight session. a lot of red across asia. the cnbc ftse global 300 down about 0.5%. losses picked up at the trading session yesterday. we were down by 2 to 3 percentage points by the end of the session, and this morning, some rebounds adding about a third. the cac 40, the ibex in paris respectively trying to add about 0.5%. that wouldn't fully recover, i should say, some of the losses we saw yesterday. >> yes.
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>> the thing that spooked the markets yesterday, the rise in bund yields. spanish yields were up 5.44%. we're right on that mark at the moment, 5.43%. the biggest jump in yields we've had so far this year. we're a little below that at the moment. and we're still a long way below those highs we hit in 2007. we will be looking at spain on thursday, looking to raise up to 4.5 billion. we're going to see how that one goes with renew services on it. services pmi came in better than expected. it hasn't helped out gilt. take a look at the currency markets, through, 1.3711 on friday against the dollar. we dipped down to 1.3485 during the asian session. you can see we're 1.3516.
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a little bit of a spike after the composite pmis today came in or the service pmis pushed composite pmis up a little bit higher than the expected flash numbers. dollar/yen, 92.575. aussie -- slorl, 1.04 mark. sterling/dollar, 1.5774. that's where we stand right now. ahead of the u.s. and european trading. sixuan has the latest for us out of singapore and how asia has gone today. >> that you can, ross. the shanghai composite ended marginally higher on the back of that upbeat hsbc services pmi data. property stocks led the bores to its third straight day of gains. railway stocks soared ahead of this week's travel season. beijing moved to restrain
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lenning ahead of russia's lows. hong kong listed shares tumbled 4.6% today after a $3.1 billion new share placement added a 9.5% discount from monday's closing price. in japan, the nikkei pull back from its yearly high. hitachi shares slipped over 4% after slashing profit outlooks by 6%. fast retailing lost over 3%. this comes after its clothing chain closed in domestic same-store sales last no. the kospi slipped for a fourth straight day to lock a two-month low. australian's asx 200 posted its biggest drop in four weeks. though the pains were scaled back saying global risks are abating. india's sensex closed down by 0.4%. back to you. >> thank you.
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>> meanwhile, testifying before the parliamentary commission on banking standards today -- >> we're just starting to get a little bit of their comments out. anthony jenkins broadly seems to have heard what was said about punishment should banks break the law going forward. >> don't spoil it. if we do this, everyone will be protected. there's a lot of reason why people are looking at what happens both with barclay's in particular and with these comments generally speaking from regulators about where the pressure is going on their banks from here. >> we're electrifying it. >> ubs has posted a quarterly
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and full net year loss hit by a 1.5 billion dollar charge. the spanish banking giant promised to beat expectations in the fourth quarter. it's eventually going to shed 10,000 jobs. the equity fixed income, of course, carolin is in zurich, has been speak with the ceo and join us for more. hi, carolin. >> hi, ross. investors down know what to do with these results because now the stock is trading flat. it was down by as much as 3% when the stock first opened, it was up by more than 1%. now, numbers weren't bad because as you pointed out, the net loss was a little smaller than expected at 1.9 billion swiss francs in the quarter. we knew ubs was going to post a log, larmgly as a result of litigation provisions of more than 2 billion swiss francs. also because of restructuring charges, losses on its own debt. but, again, the net loss, a little smaller than expected. now, a couple very positive points to point out here, ubs
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managed to build up its capital levels, the basel three ratio looking healthy among the best in class. on top of that, the company increased its dividend by 50%. that seems to be taken off very, very well by investors. on top of that, we've gotten investment banking revenues bouncing back quite nicely, but then that's tied to the very good market environment in the fourth quarter. and you've got the risk weighted asset reduction which is actually ahead of schedule. now, what did disappoint investors, though, is the fact that its wealth management business underdelivered in terms of margins, revenues and net new money inflows. and when i spoke to the ceo this morning, he told me what was suppressing those margins. >> structural problem and macroeconomic problems that are sentiments are still there and they need to be resolved in order to have a sustainable
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return. >> what is the biggest risk to client activity and client confidence going forward in 2013? >> well, i would say both geopolitical events, i would say, or, you know, basically that europe or the u.s. discussions are basically going back to where they were last year. and that would be clearly undermine their confidence. >> your capital levels are very strong. you announced a 50% increase in your dividend payout. now analysts are expecting even more over the next couple of years. they're looking at dividend yield of anything between 7% and 9%. is that feasible? >> well, we will have a progressive policy, but most importantly, we will have a payout ratio of at least 50% when we achieve our 13% basel fully applied equity ratio to achieve by the end of 2014.
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>> let's continue the discussion of ubs's results with dan becca. sir, thank you so much for joining us. so after ubs announced the restructuring measures, you said you were very much unimpressed with everything that ubs has shown us so far. you said ubs is trading at multiples it didn't deserve. do you feel the same way after results today? >> yes, i do. i know there were lots of positives and negatives on the result. i focused more on the negatives within the management. we saw a sharp dro.in margins once again. not fort first time, i think the margins are trading on an all-time low. we had very disappointing money and what investors want to buy is a very good wealth management operation. maybe we are finding out right now that the wealth management is not as good as many people thought. >> and that's exactly what ubs wants to put its evidence on going forward at the expense of the investment bank. but do you think that margins have bottomed out here? >> i think in the margins,
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certainty there is a small cyclical effect in this. when markets improve, we will see some pick up in the margins. but there's a structural element in this. we have to move away from the traditional western european high margin markets to the lower margin markets in asia and pacific. we have retrosessions problems and we have many other things which structurally will depress the margins. i don't think they would get back to the 95 basis target we put out. >> let's talk about the execution of the re structuring that was announced in october. the markets have been extremely favorable for that execution. so risk has been lowered. but to what extent is the success of that new model just depend on what the markets are going to be doing? >> i think ubs has a lot of potential for self-help here. they want to more or less close down large parts of the investment banks. the reason why i'm not so positive is because i don't think that investment banking is necessarily a bad business. so there would be times in the
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cycle when investment banking is very good and when ubs lifts us now, there's no way back for them. so this is a decision which they can't reverse and that's mainly the reason why i'm not so extremely excited about this. >> and that's why you like credit suisse more than ubs? >> that's correct. credit suisse, i think they found a business model for the investment bank which will work in the basel three so they are a little bit more diversified and they will be able to participate in any market run that we might see in the future. >> doug, thank you so much. we'll certainly get your thoughts again when credit suisse reports numbers on thursday. we'll see how they measure up to ubs's numbers. but for now, guys, back over to you. >> all right, carolin, thanks very much. our thanks, as well. the world's top automakers kicked its annual profit forecast on to higher gear. toyota expects to earn 10% more thanks to strong sales in the u.s. and a favorable exchange rate. its third quarter net profit is weaker than expected.
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analysts say it benefits more from a weak yen that than its peers since it builds more cars in japan. bp has reported better-than-expected earnings in the fourth quarter. pretax profit came in at about $3.5 billion. replacement costs were just over 2 billion. reshaping work will continue to impact 2013 results. as a trial over its role in the gulf of mexico oil spill is scheduled for later this month. cnbc's spoke first to ceo bob dudley. we'll let you know what he said about bp's upcoming trial at 5:30 p.m. eastern. first, some results here. greece has been to auction. and afternoon selling about 800 million euros of t-bills at 4.7% coming in decent, 1.68 versus 1.62. we are seeing the greece bores, the greek stock market reversing losses, up about 1.3%. >> see what happens there.
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meanwhile, let's remind you of what's on the agenda in the united states today. fed governor elizabeth duke speaks at 8:30 eastern. the january ism services index, that's out at 10:00 a.m. some forecasts according to the reading of 55. that would be a move down from 55.7 in december. and on the earnings front, look for results before the open from adm, delphi,s take louder, kellogg. after the close, we'll hear from disney, aflac, chipotle, cme and zynga. and on thursday, don't miss charles evans, kelly's uncle charles, he'll be on "squawk box" at 8:40 eastern. that the, kelly? >> not uncle charlie, but i like
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to hear what the namesake has to say, nevertheless. a sharp sell-off in equity markets. jitters over europe has investors scurrying for safe haven assets again. is this the beginning of a big risk off trade? read the analysis and department over at our website, cnbc.com. europe has seen quite a rally in the euro. but with mounting uncertainty over the upcoming italian election necessary spain's mariana rajoy, is it now heading for a big fall. u.s. prosecutors intend to bring civil charges against standard & poors over the rating of mortgage bonds prior to the financial crisis. it would be the first federal enforcement action brought over the alleged legal behavior. see what men tate e commentatory about it.
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that's on the website, ross. >> meanwhile, the u.s. government has filed a civil lawsuit against standard & poors. stocks plummeted yesterday. but what's next? we'll discuss when we come back.
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you're watching "worldwide exchange" this morning. these are your headlines. bp beat estimates in the fourth quarter as it prepares for a crucial trial on the gulf of mexico oil spill. >> ubs faces losses due to restructuring fees and legal charges. and the u.s. files suit against s&p over rosy ratings the mortgage bonds gave in the leadup to the financial crisis. >> the group haedz alcoa, yahoo! and marriott. companies have supported immigration reform. businesses have long complained the u.s. doesn't offer enough see vas for high skilled workers from other countries. meanwhile, the u.s. government has filed a suit against standard & poors over mortgage ratings.
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they've long been criticized for giving high ratings to subprime and other mortgage securities that quickly turned sour. the s&p says the suit focuses on its ratings for several in 2007, but it lacks merit. reports suggest several states may join the government's suit. mcgraw-hill fell 14% on monday, its worst day since the stock market crashed in 1987. moody's down nearly 11%. >> did you speak in the snack after the break? >> why? >> i just wondered if there was a little bit of snacking going on. >> the important thing is to keep one's energy lefs up. >> that's right. >> should we look for a sponsorship from a goo company or something. in any case, difficulty over here. we don't have a lot of time on the breaks. >> earlier in the show, we asked you about ratings agencies and whether you always trust their
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decisions. slade in alaska says he does the opposite of what credit ratings recommend because they're so far behind the curve. >> joey from indiana says credit ratings are now too stringent. >> yep. not a lot of faith necessarily in those firms. we mentioned competitiveness. we're talking about immigration reform at the white house. joining us on the table is now roger dafen. just around the corner from us here in london. thank you for coming by. >> pleasure. >> do you agree with what the white house is saying and what a lot of these ceos seem to be saying which is that the country is suffering a lack of competitiveness because of the lack of immigration policy? is this the next issue on the agenda? >> i think it's one of the issues. look at how they acted after 2008. i mean, the recession technically in the u.s. was smaller than it was in the eurozone. but the measures that were taken
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in the u.s. at that point in time in 2008 and 2009 were a lot more stringent than they were in the eurozone. if you look at the job cuts at that point in time, if you look at insolvencies, i think it's a lot more stringent than it happened here. but the flip side of the coin is the way it worked itself out of the recession i think is more impressive than what we're seeing here. wouldn't you say that has more to do with avoiding a sovereign debt crisis by virtue of not being a haphazard monetary union? >> that's part of it. but also, i think the way the u.s. manage itself out of the crisis was a lot more draconian measures than what we saw here. and i think some of the things in the u.s. like the labor market, it will be an asset to being out of the crisis in a better way. if you look at the u.s. economy today and you contrast it to the eurozone, we'll come to that in a minute, but if you look at the u.s. economy, we're optimistic about the way it works itself
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has worked itself out of the crisis. >> this is interesting because if you look at what's happening in europe, it's been market pressures that put for market reform. absent those market pressures in the u.s., with things getting better, is there pressure to push for immigration reform .should there be from your perspective just outside the u.s. for getting the political process, how relevant is this issue? >> i think it's definitely a relevant issue. i think the u.s. thrives and has thrived for many, many decades over the ability to attract top talent and i think attracting top talent is a key asset. and i think more and more what we see with innovation becoming more dominant in the economy, more .more what you see is the real high end of the knowledge. i think that's something that the u.s. -- >> do you have any trouble in your experience as an executive, whether it's here in the uk or in your office is around the
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world? >> clearly, we're doing very well. in the past six months, we hired 32,000 people. we're definitely an employer of the choice. but by the way, we're investing very, very significantly in that. to us, we employ over 200,000 people worldwide. talent is absolutely fundamental. we invest quite a bit. last year, we opened a university in the u.s., you know, deloitte university with training facilities for over 800 people per day. that is absolutely vital. so you need to create the environment for your people. it's being used. >> we've added a couple of chairs and a canteen. still to come on the program, boeing is pressing -- it works. but boeing is pressing. you have to catch people, you know, when they're hungry. literally. it's pressing u.s. officials. boeing is pressing u.s. officials to let its dream liner
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take off for a series of test flights. will be faa give any ground? we'll talk about it when we come back. great, everybody made it. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.
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all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. cnbc has learn boeinging has asked the faa to conduct test
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flies of the 787 dreamliner jet. it prommed a worldwide grounding of the jet two weeks ago. the seattle times say the faa may give the green light soon. boeing shares, though, are responding to the upside this morning. adding about 0.8% in trade. apparently not too fussed by it, ross. >> yeah. those claims are still mounting, of course. meanwhile, shares of virtual media have jumped after the group confirm it's been approached by cable group liberty global for a potential takeover. a successful merger would deliver significant savings which is controlled by u.s. billionaire john malone. the transaction heats up after bskyb is heated up. >> battle of the titans, part three, four, five, you might say. it will be one to watch. in any case, roger is still with us on set. this morning, we got a bunch of
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data out showing that the service sector in the eu is picking up a little bit. what's interesting is to look at the importance of the service sector to the eu economy generally speaking. are there any signs here ott not just a cyclical but structural change under way? >> well, definitely if you look at euro, the eurozone, you look at the pmi index, you see that that's going up. and i think even though it's still below 50%, the increase to 48.6, the composite index today i think is good news. because it does appear we're bottoming out. if you're talking about structural changes in services, one of the things that i believe we should be talking about is innovation and disruption because i truly believe that in the services industry, and we're a part of that, but also in the banking industry, for instance, you see technology playing a more significant role in what we do. you see it taking over routine jobs, production jobs, etcetera. technology disrupts as really
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more routine knowledge, but more .more with the advent of data analytics and things like that. the nonroutine work is being taken over. >> are you saying it's coming for us? >> well, it's coming for you. it's coming for us, as well. definitely innovation and the way innovation can change the way we grow our business. >> what is the biggest impact going to be in a year's time? >> data, the massive availability of data and is with new technology, we all know more and it goes like that. it's an exponential function. so it explodes at a certain period of time and i think we are at that point of the curve where processing power explodes. and i think having that huge processing power was the huge availability of internal/external data, combining that, making some of that .allowing for better informed decision making. i think that's really what we're seeing. >> maybe it can resolve the eurozone crisis? what do you think?
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>> no. >> in a word, no, probably not helpful. >> but the more informed you are, the more you know how little you know. >> how how we feel on the program. roger, thank you so much for coming by this morning. still to come on the program, can young stand the heat or are they on their way out of the kitchen? >> in china, fourth quarter were eggs aren't looking very appetizing. stay tuned.
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welcome back to "worldwide exchange." i'm kelly evans. >> and i'm ross westgate. >> ubs sees fourth quarter earnings hit by declines in restructuring charges and legal fees. shares in hsbc beats estimates in the forth quarter. bp's ceo bob dudley says he hopes to turn the page on its legal troubles. >> we've moved a lot of this behind us. we've met commitments and we're going keep meeting our commitments. but we'll see how long it takes. >> and is ratings firms under fire. the u.s. files a civil suit against s&p over rosy ratings the company gave to mortgage funds in a lead up to the financial crisis.
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>> announcer: you're watching "worldwide exchange," bringing you business news from around the global. >> u.s. futures are actually pointed for pretty strong open, but that, of course, follows one of the weakest trading sessions we've had in a couple of months time yesterday. about a percent more -- about 1.5% shaved off these major indexes in the case of the nasdaq, the weakest link yesterday. a lot of tech stocks doing quite poorly. nevertheless, the dow added up 62 points or so at the open. now a couple of points back on the nasdaq. the s&p 500, too, is pointed higher. points looking to open below that 1500 level as things currently stand. looking at the asian trading session, we saw things selling off. by tend of the day, we were looking at major declines on the bourses. some ground is being recovered this morning. a better tone to the session, but certainly nothing to recover
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what we saw come off these indexes. 0.3% on the ftse. today, the sweat wa dax is fractionally higher. the cac 40 adding 0.5%, ross. the ibex is rebounding by 1%. as you've rightly pointed out, that's only about a third of the decline you saw in this index yesterday. >> meanwhile, we've been talking about the reports of liberty the. we're now hearing bid talk wes virgin media at the late stage of negotiations. this is two sources being quoted by reuters. those two sources say the major parameters have been agreed in those bid talks. so two sources saying the talks are fairly advanced the.we're now in the late stages of a proposal by virgin media. virgin media up 14.9 the%. virgin media was initially a merger in the cable businesses in the uk and then they got on, of course, to phones and -- >> quadruple play, they're one
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of britain's first quadruple playerers in the business. >> meanwhile, bp has reported better than expected profits in the fourth quarter. the company says reshaping what could continue to impact 2013 is the trial over its role in the gulf of mexico oil spill is scheduled for later this month. julia has been speaking to the ceo, bob dudley, and joins us for more. what kind of mood was he in, julia? >> hey, ross. he was in a somber mood when we talk about the events in algeria. but with regard to business and the divestments and the progress, he seemed relatively upbeat. as you pointed out, they beat expectations. underlying profits just shy of $4 billion versus $5 billion in the same period last year. they were, of course, impacted by the sale of the decision to sell off their stake in tkn/bp.
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to give you some idea, that contributed net profits in the third quarter of around $1.3 billion. so you can get an idea of the impact. dividends held steady at 9%. when i spoke to bob dudley about this, too, he said he's sending a message of confidence about the business and shah shareholders are within the version of this sights. i mentioned algeria. i couldn't get away from talking about the events just two weeks ago and i asked him specifically about warnings that came last year from the risk assessor exclusive analysis. and i asked him whether he had seen those warnings about algeria and the specific gas fields where the events took place. >> there was no specific warning or warning in advance of this attack. i mean, these murderers came in and killed people just on a normal work day. so the algerian authorities and us didn't have warnings, but we
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certainly had tight security around many of our facilities and wherever we operate, really. >> is 2013 the year where you draw a line, perhaps, on the litigation issue that you just mentioned? >> for us inside the company, 2011 definitely felt like a turning point. we had no rigs operating in the gulf of mexico until late in 2011 in the third quarter and today we have seven operating and a couple others that were operational. so it was a turning point. as the divestments, this is a massive set of divestments. we've sold 50% of our platforms, a third of the wells and only 10% of the reserves. so we have a nice, strong platform to grow off of. >> we mentioned the litigation there. do you anticipate seeing an end to that this year? >> litigation can sometimes go on for years and years. but if you think back to 2012, we sold -- we've settled with
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the plaintiffs' attorneys, steering groups in the united states, we've settled with the justice department and the s.e.c. we've settled with our partners in it and we're now moving into the civil proceedings which are coming up and there's a trial in february. and we're prepared and heading into that phase. but i think we've moved a lot of this behind us and i think we've met our commitments and we're going to keep meeting our commitments. but we'll see how long this takes. >> february 25th, now the key date for bp when their civil trial is set to begin. the question is will they settle early. the likelihood is according to the current plans that we won't get a decision on that until next year. so if they don't settle, this could be hanging over bp and, of course, perhaps weighing on the share price for another year. so that's certainly the date to watch. for now, though, kelly, back to you. >> julia, thanks very much for that. julia is standing on what looks like a sunny part of london. you don't usually see that, the sun lit shot. a little windy, though.
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>> you don't normally see a sunny shot of london. >> i'm sure by the time i go out in a bit, it will be pouring rain. >> or sleep is coming. yum brands stumbled badly in the fourth quarter. kfc suffered a slump in china. >> investors sold off shares of yum brands after the company reported it continues to take a hit to sales in its largest market, china, where the government investigated poultry bought. there's a lot of media coverage going on with this in china. instead of positive earnings growth for the 2013, the company now forecasts earnings per share will drop with a significant decline in the first half before the situation turns around. yum reported a 6% drop in same-store sales in china, but says it is worked to incorporate government recommendations into its poultry supply chain and it's committed to win back customer these through a brand marketing campaign. ceo david novak said, quote, having weathered other storms in
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the past, we know that our brands are resilient. well, nowhere is that born out more than in the u.s. where the company has bounced back from questions a couple years ago about how much beef is in its taco meat at taco bell. same-store sales in the quarter grew up 3%, but at taco bell, they were up 5%. operating margins continued to improve and taco bell just had a hit commercial air on the super bowl. the quarter just finished was better than analysted expected with everyone earnings up 11%. back to you in london. >> love jane wells there. recapping what is happening at yum. what's really interesting is that if you had looked to yum as a barometer for the macro global growth story when they started expanding in china building up to 60% of revenues or what have you, are they at a point where there are other margins becoming important? and what does that suggest about
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growth profits up in other parts of the world? india, they like the demographics better than china. is there a broader message to take away from all of this? >> it may we bell. their population, i'll tell you what, seven years away. >> and we're talking about worker shortages within a couple of decades. >> the reports are amazing. coming up, is bigger really better? we're not still talking about fast food. finding out if the market has the appetite for apple's new beefier ipad.
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you're watching "worldwide exchange." welcome back to the program. these are your headlines. bp beats estimates in the fourth quarter as it prepares for a crucial trial on the gulf of mexico oil spill. >> ubs posts a fourth quarter loss. restructuring charges, but the shortfall is less than expected. >> and the u.s. files a civil suit against s&p over rosy ratings the company gave to mortgage bonds in the lead up to the financial crisis. >> now, the barclay's sir anthony jenkins and david walker are among barclay executives
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testifying before uk politicians today in the parliamentary commission on banking issues. those discussions are ongoing. anthony jenkins says he has adjusted the bonus pool substantially this year. the upping of provisions for misselling had an immaterial impact on bank earnings, as well. they've add in a billion pounds today. they've claims that it's impacted across the entire uk banking industry. and the chairman, he says he agrees with the reserve power for the separation of banks. this just came out in the chancellor osbourn speech yesterday. he says more new nonexecutives are in the pipeline to be hired later in the year. so you can see where the questions are going. they're going around regulation, combination, and they've also focusing a little bit on the funding. qatar came in and barclay's never ever had to go to the government because they got funding from qatar.
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there have been allegations that they funded the qatarrys -- >> in order to do that and avoid the bailout. >> the chairman says not able to comment on those fund-raising issues at the moment. >> more restructuring from barclay's to come this month. apple is rolling over a 128 gigabyte version of the ipad four priced at $799 for the wi-fi only version, 829 for mobile network enhanced models. it's aimed primarily at business professionals like architects, doctors, and photographers. joining us now is technology reporter natalie morris from the u.s. natalie, good morning. i have to confess, i didn't even know this launch was happening. is that telling? >> yeah. because it's more of a soft launch. this is not really for the average user because i think it would confuse the average user. the average user might say, well, wait a minute, do i need twice the amount of storage as the previous ipad? because for the last year, you've been pushing icloud at me.
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apple has been saying icloud, icloud, icloud, you must back up to the cloud. you don't need a lot of local storage. well, most users don't. this is for the professional. the corporate enterprise is really becoming an expanding market for the ipad. they're using software that's morrow bust and needs more storage to not only host those apps, but also host the things that you use those apps for. so for the average user, you tend to think about an app as a light download that you use to order your burrito at lunchtime. that's not how the enterprise uses the ipad. they're using robust software. year seeing doctors and lawyers and architects out in the field with big auto cad files, big x-ray files, big embedded video. also, the students, i can see a lot of use for that because the i books that apple launched about a year and a half ago, those are really intensive, big files, as well. that's why you didn't know much about it, but i don't think apple wants the average consumer
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to think of the ipad as almost a $1,000 device. it's not the average user that's going to be selling out $1,000 for this ipad. it's going to be the enterprise. if you get one of these big ipads, it's probably because your work has given you one. >> just one thing, natalie. if we store lots of big files and apps on the cloud, do we still need more power or more storage to access them? >> well, no, not really. that's going to be a -- that's going to be a factor of the processor inside the tap let that you're using and your connectivity. so either your wi-fi or your 3g or your 4g connection. so whatever you're accessing in the cloud, you don't need more storage to get to, although, you know, i tend to be a little pet peeve of mine is when i manage my app just to have as much apps as i can hold on my device. but then when it comes time to download the updates to those apps, i need more storage the download the actual update than i need to run that. and that can be confusing for consumers.
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so they might think, well, i just want to stop managing this and have more storage on board. so there's an argument to be made there. but, again, this is not for the average user who just wants to fool around on facebook and twitter on their tablet. this is for the enterprise. so this is clearly a shot across the bow of microsoft because the new surface pro is a tablet that has a lot of storage and, again, for the enterprise. so apple is saying, hey, we're for the enterprise, too. we want that market. >> all right. >> this is why i just avoid tablets altogether. it's easier if you don't start down one path and have to constantly change your habits with the latest device. nasly, thanks very much. >> thank you. >> never start smoking because you'll never be able to stop. i like the keyboard. in any days, i am not the target audience. u.s. markets suffered their worst loss on the year on monday. is this the start of a bigger move lower inspect we'll preview the u.s. trading day when we come back. all stations come oveo mission a for a final go.
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a little bit of deal news to bring you. first look at u.s. futures, up about 68 points for the nasdaq and the s&p, too. but, of course, this follows a big down day on wall street. sab miller, jb potentially to acquire a brewery business of kingway. so you can see the flash at the bottom of your screen there. we'll follow that story for you, too. joining us now with a look at what to expect from the trading session is craig muchi from ibg. craig, good morning. lots of focus in the market about yesterday's move. is it the beginning of an standed down trend in your view? >> i don't think it is. i think, you know, we got to
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14,000 over if weekend. and this is the first time we've gotten to 14,000 since 2007. we've only closed above that nine times in the past. so i think it was to some degree it was some profit taking. i think we also had a little spook tr europe. and so, you know, that sent the risk off trade back on a little bit. and so i think that's all it was with the fed in here buying -- you know, their open slides, i think you're going to continue to see support for stocks. >> yeah. so what happens if bond yields? should we be fearing if bond yields -- obviously, they came back yesterday, but if they go higher again? >> i think it's entirely possible with, you know, again with the fed buying and if you go back to the beginning of december, bond yields are up on the ten-year, up about 45 basis points. and of that, 330 basis of it is higher inflation expectation. so long as the fed is in here buying 85 billion per month, i think the expectations go go higher.
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>> talk about the rotation, craig, because this is getting focused, too. is it really happening? we've seen an uptick in flow necessary january, for sure. are you seeing this? are more people getting interested in equities, finally? >> so the -- all of our customers are in the fixed income space. what we do see in fixed income is people sitting on the sidelines. you know, really it's a tough environment. i've said they're like a ship without direction because knowing where to go is hard right now. the fed is pushing in risk spreads. there's no reward for extending out the curve and so from an interest rate risk standpoint, there's no reward to go out further. so we do see fix dollars income investors sitting on the sidelines and waiting for the opportunity to get back into the market. and i think you're seeing on a retail side i suspect you're seeing a rotation into stocks based on the flows that we see. >> there seems to be some evidence fixed income investors are going down the lower quality to find yield. is that still happening? >> absolutely it is.
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i think the first step in that process was moving into -- for our investors moving into municipal bonds. increasingly, our investors are looking down the credit curve. as an example, you can do from two years to ten years and only pick up 17 on basis points. >> we have to go. thanks for joining us. from kelly and i, "squawk box" is next. good-bye. rybody made it. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.
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